KentuckySB 502026 Regular SessionSenateWALLET

AN ACT relating to the disposition of property.

Sponsored By: Brandon J. Storm (Republican)

Signed by Governor

Banks And Financial InstitutionsBonds Of SuretyChildren And MinorsCircuit ClerksCounty ClerksCourts, DistrictFiduciariesLocal MandateMotor VehiclesReal EstateSheriffsShort Titles And Popular NamesTaxation, Inheritance And EstateUniform LawsWills, Trusts, And Estates

Your PRIA Score

Score Hidden

Personalized for You

How does this bill affect your finances?

Sign up for a PRIA Policy Scan to see your personalized alignment score for this bill and every other piece of legislation we track. We analyze your financial profile against policy provisions to show you exactly what matters to your wallet.

Free to start

Bill Overview

Analyzed Economic Effects

34 provisions identified: 16 benefits, 3 costs, 15 mixed.

Stronger asset protection in qualified trusts

Creditors generally cannot attach or undo transfers to a qualified trust unless they prove actual intent to defraud under the voidable transactions law. Deadlines apply: existing creditors must sue within the later of 2 years after the transfer or 6 months after discovery; later creditors have 2 years after the transfer. The transferor’s powers are only what the trust gives and are personal to the transferor. Courts can undo a transfer only as needed to pay the debt, and a good‑faith trustee gets a first lien for reasonable defense fees and costs. Preexisting valid liens still apply.

Stronger inheritance rights for surviving spouses

The law strengthens what a surviving spouse can claim. The spouse gets a life estate in one-third of certain real estate the decedent owned during the marriage, and an absolute one-half of surplus personal property. Surplus personal property includes beneficiary‑named assets like retirement accounts, POD/TOD assets, and joint accounts with right of survivorship. Gifts made within two years of death can be counted back. Property in a trust the decedent created for the spouse also counts and is valued under the federal 26 U.S.C. § 7520 rule. Life‑insurance paid to the spouse reduces the spouse’s surplus‑property share. The spouse can sue people who received surplus property to recover the property or its value. The law also updates who inherits when there is no will, including when the spouse takes all or half and how remaining shares split among relatives.

No usage tax on TOD car titles

Beginning January 1, 2028, a car that passes by transfer‑on‑death (TOD) title is exempt from the motor vehicle usage tax. Beneficiaries named on the title pay no usage tax on that transfer.

$100 daily fines for late estate filings

Executors, administrators, and other fiduciaries must file inventories and accounts on time after court notice. The court can fine $100 per day for each day a required filing is late without good cause. The fine keeps adding up until the filing is made.

New asset-protection trust rules

The law creates a protected trust option with strict rules. It says who can and cannot be a qualified trustee, but lets you name advisors and even serve as investment advisor yourself. It lists powers you can keep, like a veto on payouts or up to 5% annual income, without making the trust revocable. Spendthrift clauses in these trusts are enforceable in bankruptcy. Before funding, you must sign a sworn affidavit with seven statements, and a court can appoint a new qualified trustee if needed. These rules apply only to transfers made on or after the law’s effective date.

45-day window to object at trust end

When a trust ends or a trustee resigns, the trustee must give a detailed statement and five years of accounts. Qualified beneficiaries have 45 days to object in writing. If no one objects in time, the trustee distributes assets. Trustees cannot demand beneficiary indemnity to skip court approval.

Electronic wills and estate documents

Electronic wills are valid in Kentucky. The testator must sign, and two witnesses must be residents who are physically in Kentucky at signing. The law also recognizes electronic non‑will estate documents and electronic signatures. It allows certified paper copies and treats lawful electronic presence like in‑person witnessing where permitted. These rules apply to electronic documents made before, on, or after the law’s effective date unless another law forbids electronic form.

Name a beneficiary for your car

You can add a transfer‑on‑death (TOD) beneficiary to your vehicle title. The county clerk records it for a fee. After you die, the beneficiary shows a death certificate, pays or proves ad valorem taxes, and gets a new title, subject to any lien. The owner can revoke by selling or filing a new designation. The TOD transfer is non‑probate and not taxed under KRS 138.460.

Stronger estate administration and enforcement

Personal representatives can ask the court to force delivery of estate property that is hidden or withheld. Courts get monthly reports on delinquent fiduciaries and can remove them, fine them, or hold them in contempt. A successor can sue a prior representative and the surety for losses. If no one serves, the court appoints a public administrator, including after 60 days when the family waives or no one is suitable. Courts can skip formal administration when exemptions and preferred claims cover the estate, accept informal final settlements after six months when debts and taxes are paid, require annual accountings, and require 20‑day certified‑mail notice before settlement hearings.

Easier special needs trusts by decanting

A trustee can move assets into a special needs trust for a disabled beneficiary if it furthers the first trust’s purpose. The new trust can be a pooled trust or include Medicaid payback terms. This helps keep the person’s eligibility for government benefits. Other beneficiaries must keep substantially similar interests.

Adopted child must have lived with parents

For inheritance, an adopted child counts as the petitioners’ child only if the child lived in their household before age 18. Without that residency, the adoption judgment alone does not grant inheritance status.

Updated trust terms, moves, and repeals

Key trust definitions are updated, and the law clarifies when trust terms control and which protections cannot be overridden. A trustee may move the trust’s main administration location but must give qualified beneficiaries at least 60 days’ notice; a timely objection stops the move. District Court has exclusive jurisdiction for these transfers. The law also repeals prior statutes on directing powers, an older decanting approach, and delinquent‑fiduciary certification.

Stricter duties for Kentucky estate executors

Personal representatives must file a sworn, duplicate application with heir contact details and a perjury acknowledgment. They must file a sealed inventory within 90 days, share copies as required, and update it when assets change; the clerk sends a copy to Revenue. For settlement, the clerk publishes notice, or with court approval the fiduciary may mail notice; estates or trusts of $2,500 or less in court‑only accounts are exempt. The court can remove a representative for incapacity, insolvency, moving without a process agent, or failing circumstances, and require handoff to a successor. Required bonds must be filed with the county clerk, and certain court officers or local attorneys cannot be surety. The law defines who is a fiduciary and who is a principal.

New rules for trust decanting and taxes

Trustees can move assets to a new trust even if no payout is due. They cannot do this if the original trust expressly bans it, raise their own pay without consent or court, cut trustee liability, or change removal powers without consent or court. The new trust must keep key tax features like marital and charitable deductions, gift-tax exclusions, S‑corp status, GST treatment, and retirement minimum payout rules. A new trust can switch grantor or nongrantor status in some cases, but a settlor’s signed objection can block certain changes. If a new trust document partly fails the law, bad clauses are void, required terms are read in, and the fiduciary must correct it. Kentucky treats a second‑trust document as part of the trust’s terms.

State buying centralized; locals can use contracts

The Finance and Administration Cabinet now runs most state buying and disposal of supplies, services, and construction. State price contracts must allow approved cities, counties, and other local bodies to buy under them. Locals must follow competitive bidding rules unless the state contract was competitively let or properly negotiated.

Electronic wills apply by death date

Electronic‑will rules apply only when a person dies on or after this law’s effective date. Wills of people who died before then are not covered.

Health history for adoptive families

Agencies must give adoptive parents a standard, non‑identifying health and family history by the date the adoption is finalized. Where available, it includes HIV and hepatitis A, B, and C test results. Adult adoptees can later request this information, with identifying details still protected.

New procurement and contract rules for agencies

The Finance and Administration Cabinet serves as the central buyer and uses best‑value rules and a procurement manual. It sets sale and disposal steps for state property and must answer local governments about unused state property within 60 days. Some items (art for display, published books and maps, and visiting speakers/performers) are exempt from central purchasing unless the secretary orders otherwise. The cabinet must share state contract information so local governments can participate. All public agencies must follow resident‑bidder preference rules, and the cabinet cannot block Fish and Wildlife from multi‑agency contracts or accounting access.

Energy‑saving projects in state buildings

The state energy program carries out low‑ or no‑cost energy measures and monitors results in state‑owned or leased buildings. Qualified engineers, architects, or trained people must perform the energy analyses. Staff under guaranteed energy savings performance contracts are exempt from certain procurement rules.

State law library updates and fund

The State Law Library must keep core legal books and statute sets. It can trade materials with other governments, set operation and lending rules, and help county law libraries. Surplus books may be sold with proceeds kept in a non‑lapsing fund to buy replacements.

Energy‑saving projects and financing in 2028

The state must prioritize energy measures with a simple payback of five years or less when general funds are available. Monitoring is capped at 5% of project cost. If general funds are not available, agencies may use guaranteed energy savings contracts; savings first pay the contract and financing, and remaining savings stay with the agency. Savings must be measured using IPMVP or a documented, approved method. These priority and financing sections take effect January 1, 2028.

Fairer picking of state design teams

New selection committees choose architects and engineers for state projects. Members come from merit employees, professional pools, and a Governor‑appointed pool with random selection under audit oversight. Agencies must attest to compliance and keep full records for audit.

Shared buying and small school purchases

Public agencies can join cooperative purchasing agreements to buy goods, services, or construction together. The state will set rules so local users reimburse any extra state costs. School districts may buy outside a statewide contract for items that match specs and are cheaper, for single purchases up to $2,500.

Small taxes and a $33 recording fee

Recording a listed document of five pages or fewer costs $33. The clerk keeps $27 and sends $6 to the Affordable Housing Trust Fund each quarter. A $4.00 tax applies to many filings, like mortgages, property conveyances, mineral liens, powers of attorney, and recorded wills. A marriage license has a $4.50 tax. Clerks collect these at filing or issuance.

Clerk fees, taxes, and records fund

Starting January 1, 2028, court clerks collect the court‑ordered name‑change filing fee and send it with the certified order to the county clerk, unless the order is sealed. County clerks must report and remit collected taxes to the Department of Revenue within 10 days after each month. One dollar from each taxed recording goes into a local records grant fund, and 90% of that is reserved for county clerk grants.

How trustees can decant a trust

Kentucky sets out a process for moving assets from one trust to another (decanting). It applies to most express trusts that are irrevocable or only revocable with consent. An authorized fiduciary must give written notice at least 60 days before decanting, unless everyone entitled to notice waives that period. Courts can review, approve, or stop a decanting. A signed record must name the old and new trusts and state what property moves where.

Limits and safeguards when decanting trusts

If a fiduciary has broad discretion, they may decant but cannot add new current beneficiaries or cut vested interests. With limited discretion, the new trusts must keep each person’s interests substantially similar. Charitable gifts and purposes are protected, and the Attorney General can act to enforce them. Debts tied to the first trust still follow the property after decanting. Animal trusts need protector consent, and money stays for the animal’s care; later-found property follows rules based on whether all or part of the principal was moved.

New rules for directed trusts in Kentucky

Kentucky now has clear rules for directed trusts. A trust can give a trust director a power of direction. Trustees must usually follow a director’s directions and share needed information, but not if that would be willful misconduct. Trustees do not have to monitor a director unless the trust says so. These rules apply to trusts administered in Kentucky for actions taken after the law starts, and directors accept Kentucky court jurisdiction.

Clearer probate and electronic document rules

Notice to a representative counts the same as notice to the person they represent, and a representative’s consent binds the person unless they object in time. A settlor cannot bind a beneficiary for certain trust changes. The law clarifies that trust and related rules apply to second‑trust documents made by decanting.

Estate statement sealed and sent to Revenue

Your estate’s general financial statement is filed under seal and stays private. The law limits who can see it and bars release based only on public‑official status. The court clerk must also send the appointment application and the sealed disclosure to the state Department of Revenue.

Guardrails on trust decanting and e-signatures

When a trustee moves property from one trust to another, that property keeps the first trust’s limits on how long it can last. The law also limits use of electronic signatures and electronic delivery for certain required decanting notices. Some electronic records still apply, but key federal E‑SIGN protections remain and some notices cannot be sent electronically.

New rules for trust control and directors

While a trust is revocable and the settlor seems capable, the settlor controls it. A holder of a withdrawal power has settlor‑like rights for that property. Some powers are not treated as “direction” powers, like powers of appointment and certain tax powers. Trust directors generally have the same duties and liability as trustees, and they follow Medicaid payback and charity rules. Cotrustees may act by majority and must try to stop or fix a cotrustee’s breach. The law clarifies who can receive notice and give binding consent, and how e‑signature rules apply to these trust sections.

Wills custody and e-document rules updated

Every will admitted to probate is recorded and kept by the clerk. Wills recorded on or after January 1, 2027 are not returned before two years. Wills recorded from 1978 through 2026 are not returned or destroyed before ten years. The law expands what counts as a will, including codicils, executor appointments, and papers that limit intestate rights. It also sets how state e‑document rules interact with federal e‑signature law and bars certain federal e‑notices.

Court collects will fees in 2028

Beginning January 1, 2028, after a will is probated, the court clerk collects the recording fee and tax. The clerk then sends the will, certified probate order, and the money to the county clerk. This changes where and when you pay, not the set amounts.

Sponsors & Cosponsors

Sponsor

Brandon J. Storm
Republican • Senate

Cosponsors

Daniel Elliott
Republican • House
DJ Johnson
Republican • House
Lindsey Burke
Democrat • House
Robert Stivers
Republican • Senate

Roll Call Votes

All Roll Calls

Yes: 150 • No: 12

House vote • 4/1/2026

3rd reading, passed

Yes: 78 • No: 12

Senate vote • 4/1/2026

passed

Yes: 36 • No: 0

Senate vote • 3/4/2026